I read your blog post. Of course, you're right. In the limit, as all technologies trend toward zero cost, people will always choose their own personal versions of the technology (see mainframes vs. PCs, for instance). Whether they have somebody administer that for them or do it themselves will always depend on skill level, but the general technology trend is that the products themselves become near-free with a sift of value to the services that help non-expert consumers deploy and use those technologies. A good example of that is the company where I currently work, Vyatta, which is doing that in the network infrastructure business.

One failure of strategic thinking is not to think out far enough, however. The reality is that VPS as we know it today really isn't the limit either. As prices continue to fall even further for hardware and we develop very automated provisioning systems to control the bring-up and tear-down of VPS instances, we'll end up with something closer to Amazon EC2. Essentially, imagine a free virtual, elastic cluster.

And yes, this is actually good for anything that isn't a LAMP component as it will allow low-end proliferation of lighttpd, Lisp, Ruby, FCGI/SCGI, etc. If you have the skill to build an app, the tools will be virtually free to do that. If you don't have the skill, it's again back to a service business to help you manage that.